Aurobindo Terminates $900-million Sandoz Product Acquistion Deal

Indian drug major Aurobindo Pharma on Thursday announced the termination of a $900-million buyout agreement it had entered into with Sandoz for its US generic oral solids and dermatology businesses in September 2018.

A mutual decision to terminate the agreement was taken as the approval for the transaction from the US Federal Trade Commission was not obtained within the anticipated timeline, Aurobindo said in a filing.

Though the wait for the nod to conclude the transaction was extended multiple timelines in the past 19 months, Thursday’s announcement came as a surprise, because the Aurobindo leadership had as recently as the first week of February said they were about to get the approvals in a month or two.

The transaction would have not only have been the biggest among Aurobindo’s acquisitions, but would have helped it more than double its US revenues on a consolidated basis, surpassing $2 billion.

Focused on further expanding its US business, Aurobindo had entered into a deal to buy Sandoz’s dermatology business and a portfolio of oral solids comprising 70 per cent of products on offer for divestment by Novartis AG’s subsidiary.

The proposed deal also included three manufacturing facilities in the US, and 100 per cent share-holding in Sandoz’s subsidiary Eon Labs, besides 300 products among several authorised generics, in-licensing products and branded dermatology products.

Talking to analysts on February 7, Aurobindo Chairman P V Ram Prasad Reddy said they were hoping to receive approval that month, while Managing Director N Govindarajan explained that the approval would not stretch beyond March, as it was in the final leg. The firm was preparing to present the consolidated financials from April 1.

With the deal falling through, Aurobindo will lose the opportunity of immediately becoming the second largest generics player in the US, though its aim to become debt-free could be achieved quicker as the transaction was to be funded through debt.

Aurobindo had reported Rs 16,993 crore in consolidated revenues for the nine months ending December 2019, about half of it generated from the US.